Mount Clemens manager: City faces dire future if tax plan fails

Mount Clemens has already eliminated its police and recreation departments and is considering merging its fire department with neighboring communities. MITCH HOTTS -- THE MACOMB DAILY

From Main Street to Wall Street, signs of Mount Clemens’ misfortunes are all too clear.

A number of businesses have departed from the downtown section in recent years, including a Huntington bank branch on Main Street.

Earlier this month, Moody’s Investors Services downgraded the city’s bond issuer rating by two notches, a move the firm said was based on a declining tax base, property tax limitations and a recent history of underfunding the city’s pension plan.

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Things will only get worse if residents do not approve a 5-mill property tax hike that will be on the Aug. 5 ballot.

“Without more revenue, I believe the governor will determine a financial emergency exists in Mount Clemens for the same reasons Moody’s downgraded the city’s credit rating,” Interim City Manager Robert Bruner Jr. said in a news release.

The City Commission has placed a proposal on the primary election ballot asking residents to amend the city charter to allow an increase in the maximum millage rate from 15 mills to 20 mills.

Because of provisions of the state Headlee Amendment on taxes, the city is currently collecting 13.7 mills. That means voter approval would result in a 6.29 mill increase, should the commission decide to allocate the full amount.

The owner of a home valued at $185,000 would pay an extra $582 in taxes a year, under that scenario. The tax boost would be $205 for a house valued at $65,000.

Like other communities, Mount Clemens’ finances were greatly impacted by the Great Recession. The city’s State Revenue Sharing decreased by more than 40 percent between 2000 and 2012 and property tax revenue fell by nearly 30 percent following the housing crash.

Between 2005 and 2012, Mount Clemens has cut spending by a third, or $4.3 million, but the decrease still wasn’t enough to balance the budget. The commission’s current spending plan was $1.1 million over its revenues.

With only $2.9 million remaining in the fund balance, the city could be out of cash in the next two years.

Bruner said Gov. Rick Snyder will be asked to determine the city’s financial future if the proposal fails. That could mean an emergency finance manager would be appointed to oversee Mount Clemens’ spending.

A report prepared by the Southeast Michigan Council of Governments recommended Mount Clemens move to a 4-day workweek and seek 15-percent pay cuts for employees if the ballot is rejected.

Even it the measure is approved, the city should still take steps to reduce spending by hiring part-time workers as well as enhance economic development efforts to encourage organic growth to lure businesses back to the city, according to the SEMCOG report.